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Market: Equities up sharply, decline in yields and the dollar


PARIS (Reuters) – European stock markets ended sharply higher on Monday, as the rise on Wall Street in the morning helped amplify the rebound triggered by the decline in bond yields, even if uncertainties about inflation and interest rates remain in the air. forefront of investor concerns.

In Paris, the CAC 40 gained 0.8% (52.09 points) to 6,524.44 points, its best closing since June 6. In London, the FTSE 100 rose 0.69% and in Frankfurt, the Dax gained 0.84%.

The EuroStoxx 50 index ended up 0.85%, the FTSEurofirst 300 0.73% and the Stoxx 600 0.74%.

At the time of the close in Europe, Wall Street was also evolving in the green, the Dow Jones winning 0.53%, the Standard & Poor’s 500 0.52% and the Nasdaq Composite 0.74%.

The monthly report on American employment published on Friday, marked by job creations much more numerous than anticipated, suggests for many observers that the economy remains in good health and can therefore withstand the tightening of the monetary policy of the Federal Reserve, no matter how big.

To this observation is added the decline in bond yields, generally favorable to equities, after the surge suffered on Friday, and the prospect of the implementation of the Biden administration’s “inflation reduction” plan, valued at 430 billions of dollars.

However, caution could quickly regain its rights since investors are awaiting monthly consumer price figures in the United States on Wednesday.

In the longer term, the stock market outlook in Europe remains gloomy, warns BofA Global Research, which raises the possibility of a decline of 10% by the end of the year after the rebound of recent weeks, due to macroeconomic uncertainties. .

VALUES

In Europe, the general upward movement benefited in particular the cyclical sectors of distribution, whose Stoxx index gained 2.69%, financial services (+1.75%) and automotive (+2.10 %).

The technology stocks compartment, which posted the strongest sectoral progress of the day at midday, only gained 0.44% at the close after the warning from the American Nvidia (-7.97%), which penalized video game players like Ubisoft (-0.39%) and semiconductor groups like STMicroelectronics (-0.53%).

Veolia gained 2% after announcing an agreement to sell Suez’s UK waste treatment business to Macquarie for 2.4 billion euros.

RATE

Bond yields, which had jumped after the US employment figures, fell again in the United States and in Europe, taking advantage of the uncertainty on the evolution of US prices and therefore on the extent of future increases Federal Reserve rate.

That of ten-year Treasury bonds fell by nearly six basis points to 2.781% and the two-year by more than three points to 3.2219%.

In Europe, the ten-year German ended the day at 0.9%, down more than six points.

The 10-year-old Italian, who took a nose dive at the start of the session after Moody’s decided to reduce its outlook on Rome’s sovereign rating to “negative” against “stable” due to the political situation, ended practically unchanged at 3.037% .

CHANGES

Falling Treasuries yields are accompanied by a decline in the dollar against other major currencies, with the greenback giving up some of the gains made after the jobs report: the index that measures its movements against other major currencies gives up 0.4%.

The euro recovered 0.24% to 1.0205 dollars.

OIL

The price of a barrel of crude, which lost up to one dollar at the start of the day, rose again after the positive opening of the American markets, taking advantage of the general renewed optimism about the economy.

Brent gained 1.25% to 96.11 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.15% to 90.03 dollars.

They thus erase a small part of the heavy losses suffered last week (-13.7% for Brent, -9.7% for WTI).

(Written by Marc Angrand, edited by Nicolas Delame)

Copyright © 2022 Thomson Reuters



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